10 Must Read Solar Stories!
November 9, 2012Ramsond Solar Panel Review of Quality and Charge Controllers
November 9, 2012Hitachi Entering Nuclear Power
The massive global backlash against nuclear energy has seen a number of top nuclear equipment manufactures like GE, Siemens, Toshiba pulling back. While Siemens and Toshiba have already announced plans to retrench from nuclear energy, GE has also voiced concerns about nuclear power being unviable compared to natural gas and renewable energy. Note even before Fukushima happened , the time and cost escalations in nuclear power projects had led to major losses for global nuclear energy giants like Areva. The Finland nuclear project fiasco has symbolized how nuclear energy economics is failing in the West. However Japanese conglomerate Hitachi is pushing ahead in nuclear power generation as it bought the British JV Horizon for over a billion dollars. Note Hitachi’s home country Japan has already decided to abandon nuclear power along with other Western countries like Germany, Switzerland and Belgium.
Read about Uses of Nuclear Energy and Nuclear Energy Companies.
Note the Hitachi-GE combine is the weakest of the top 3 nuclear equipment suppliers. The Hitachi-GE JV has lagged both of its competitors (Toshiba and Areva) by a big margin in both of these critical markets. Hitachi is trying to resurrect its nuclear division by restructuring its JV with GE but its outdated BWR technology has made it a difficult task. Hitachi sees this pulling back by major players as a good opportunity to increase its market share and revenues in the nuclear energy market.
Hitachi bought Horizon even as major companies like Areva pulled out of the bidding for the JV between German giant utilities RWE and E.ON. Note Germany has shuttered nuclear power plants and these companies have decided to get out of nuclear energy globally resulting in the Horizon sale. Hitachi is looking for partners as this JV will need to invest another $10 billion for building of 3-4 GW of nuclear capacity.
Nuclear Energy Problems in the Developed World
The Finland Disaster highlights the problems facing the Industry. Despite using top of the line EPC contractors and equipment providers, Finland has found itself stranded on new nuclear reactor development. The safety policies have become more strident and waste disposal concerns have increased. Despite older nuclear plants having very low LCOE, newer plants don’t have such low costs. Concerns over radiation, waste disposal, safety from attacks etc. make Nuclear Energy particularly cumbersome in countries with high per capita incomes. This is because of higher individual freedom and value of human life. In contract developing countries, safety regulations are regularly bypassed. The other problems facing the industry are:
1) Low Natural Gas Costs – The price of Natural Gas has crashed by more than half from the peak 2008 prices making many plants unviable. Since Energy Prices in many places are dependent on Gas Prices, this has become a big negative factor.
2) General Economic and Energy Decline – US has suffered from a contraction in Electricity Demand for the first time as Economy Declined in the aftermath of the Lehman Crisis. With prospects of future growth also lowered, the incentive for constructing new nuclear energy has fallen.
3) High Project Gestation Time and Capex Costs – Nuclear Energy requires a huge amount of capital and a long time to be built. There are huge project construction risks with frequent time and cost overruns. Government involvement is necessary due to these massive risks private capital is reluctant to invest in such high risk projects. Despite DOE guarantees, Constellation found the loan costs at 11.6% too high to make the project worthwhile.
4) No Climate Change Legislation Globally – USA has been a laggard in the Climate Change with partisan politics dooming any remote chance of Climate Mitigation efforts at the Federal Level. Despite efforts by US States and some support from US Government led by Obama, there has been no Carbon Tax or some form of Carbon Emission Caps. This has made long term investor support fore Green Energy untenable. Even Globally there has been no progress on Climate Change, just lots of meetings and hot air. The top UN climate official sees no chance of an agreement in her lifetime.
The Japanese manufacturer Hitachi Ltd. (6501) agreed to buy Horizon Nuclear Power from Germany’s two largest utilities for 696 million pounds ($1.1 billion), ensuring support for the U.K. government’s energy program. The transaction will be completed next month and secure financial backing for as many as six new nuclear reactors at two sites in Britain, according to a statement from Hitachi and the utilities, RWE AG (RWE) and EON AG. (EOAN) The German companies are withdrawing as the nation closes its own nuclear plants. The deal helps Hitachi’s goal to more than double nuclear sales to 360 billion yen ($4.5 billion) by 2021 The German utilities decided to sell Horizon after opting to close all of its reactors by 2022 following the 2011 atomic disaster in Japan. That raised questions about whether the Horizon venture could go forward.